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Your Bank > Education and Advice > CNB University

Leveling the Playing Field: Containing the Cost of College

T Benner
Thomas W. Benner, CFP® is Vice President - Financial Planning Officer and can be reached at TBenner@cnbank.com or 585-419-0670 x50689.

Earning a college degree is certainly a worthy goal. But attaining one can be so expensive that the unwary often pay far more than necessary, resulting in depleted savings and onerous loan re-payments.

The average annual cost for private college (including tuition, room & board, etc.) was $40,000 in 2010. Public schools cost half as much, but that still totals $80,000 over four years. Consider:

U.S. colleges have increased their fees since 1980 five times as fast as inflation.
Total student debt in America is now greater than total credit card debt.
Two thirds of college students graduate with outstanding loans that average $25,000.

It’s no wonder so many strapped graduates are moving back home or delaying marriage and starting a family! Although a solution sometimes seems to be returning to school for a graduate degree, that can just lead to more loans.

Median additional school debt added for a:

  • Master’s degree: $25,000
  • Doctoral degree: $52,000
  • Professional degree: $80,000

And these student loans, usually co-signed by parents, are extremely difficult to default on or erase by filing for bankruptcy. Many families are simply caught in the middle because they earn too much to qualify for direct school aid but too little to pay the full tab for college.

What to do? Fortunately, there are steps a parent can take to control and even reduce expected college expenses before they get out of hand. Being aware of these opportunities and planning ahead can make a significant difference in the eventual cost of higher education over a number of years.

Examples of strategies include:

  • Leveraging your child’s achievements in academics and extracurricular activities to help negotiate lower tuition at a targeted selection of colleges.
  • Identifying the best schools to apply to in order to increase your child’s reward potential.
  • Preparing the Free Application for Federal Student Aid (FAFSA) so it maximizes your child’s funding on grants and scholarships.

This likely seems quite daunting since most parents go through the college selection and tuition negotiation process only a few times in their lives. They are understandably not experts at identifying the most appropriate school and bargaining for an advantageous financial package.

But the colleges their children visit are frequently staffed with savvy, seasoned admissions professionals whose primary goal is to generate ever higher school revenues. This is clearly not a level playing field and unprepared parents, wanting the best for their children, often overpay.

How CNB Can Help

CNB has recognized this and recently partnered with College Assistance Plus (“CAPlus®”) to offer education and advice specifically focused on helping our customers make successful financial decisions for their children (and grandchildren). With college now such an expensive long-term commitment, it may be worth having a team of experts on your side.

Sources: The Economist, July 9th 2011; CBS News, April 12th 2011; NY Times, April 11th 2011; FinAid.Org, August 10th, 2011